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Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

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Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

#101

Post by tamana »

RobertoG wrote: post #93
whatok wrote: post #92

Earlier quoted context omitted.

It doesn't free a business of responsibility but if political pressure is put on regulators to treat companies differently depending on whether they played ball, it amounts to about the same thing.

Do you have any example of that happening? Even if this is the case, if my business is a bank, how can I forget about risk assessment just because I could get treated differently by regulators? Is it not my duty to think in what will happen in the next recession? would not be the best action to initiate legal complains? do you know of any legal action initiated by banks because of that? It seems to me that the simple…

Goldman Sachs risk assessment division assessed risks to them very accurately.

Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

#102

Post by tamana »

samfisher83 wrote: post #6
username223 wrote: post #5

For context, that's about 3 months' profits. Not nothing, but not much compared to the damage they caused.

They made 8 bil in 2014 fiscal year. That's 5/8 of their profit. It might not make up for what they did, but its a big fine.

Unless punishment sets you to negative net profit, it is not a punishment

Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

#103

Post by rhino369 »

javajosh wrote: post #25
ksar wrote: post #8

As a quick refresher, these guys sold CDOs that they knew weren't priced correctly, obfuscated the mispricing, and then profited on short positions against the securities. Took 7 years to settle for being straight up crooks. Still the Wild West out there.

The remarkable thing is that people still do business with Goldman. Why didn't the CDO debacle undermine people's trust in that firm? Isn't this a complete failure of the market?

The problem is that depending on banks roles, they are supposed to be trustworthy or not. In arms length negotiations, the banks aren't even supposed to have your interests at stake. But if they are managing your money, they are supposed to have a fiduciary duty to you.

Brokers don't owe you shit other than not lying to or defrauding you. But people don't realize this. Brokers are salesmen, pure and simple.

Worse, now brokers often have bullshit titles that hide their nature. For example, financial advisers sound like someone who has a fiduciary duty to you, but really they are just brokers. Trying to sell you on investments.

You should treat anyone who doesn't have an explicit fiduciary duty to you as you would a car salesman.

Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

#104

Post by toomuchtodo »

rayiner wrote: post #75
oceanstone wrote: post #41

Earlier quoted context omitted.

Bernie Sanders wants to break up the banks that took bailout money, creating smaller banks that are no longer "too big to fail." What are people's thoughts on this proposal?

In an industry-wide crash, as was the case in 2008, it doesn't really matter whether a dozen smaller banks fail or a few bigger ones do. And on the flip-side, big banks are a lot more efficient than small ones, for the same reason Wal-Mart and Amazon are more efficient than mom-and-pop stores. Everyone loves to hate Amazon, but who wants to go back to the days before same-day drone delivery? Similarly, who wants to g…

> And on the flip-side, big banks are a lot more efficient than small ones, for the same reason Wal-Mart and Amazon are more efficient than mom-and-pop stores.

I don't care much for efficiency when it allows for the penalty-free violation of the law. Efficiency isn't the end all, be all metric.

Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

#105

Post by pak »

Laaw wrote: post #100
pak wrote: post #22

Earlier quoted context omitted.

Is the fair market value for the interest rate on a loan really that abstract? This must be why with the simplest rhetorical flourishes, the financial industry can convince people that their hundreds of millions in lobbying dollars are well spent on regulation that protects average Americans. An interest rate has to incorporate size of the loan, expected term of the loan, and risk of default (recall these were distre…

No one said or implied any of what you're saying. Did we or did we not get more money back from the banks than we gave? That was the question, and the answer was we did. No one's making value judgements about that, it's just a statement of undeniably true fact. That is the literal definition of profit, and the US government made a profit on the loan.

Look, man, there's a reason this thread is all the way at the bottom of the page. If you actually think that your "literal definition of profit" (that any returned Y in the future, minus X loaned now, exceeds 0) is at all meaningful in a world with inflation, risk of default, and the commonly accepted practice of charging interest, I don't know what else to say.

Please see any [1] of [2] these [3] to understand why it isn't as simple as "Y - X > 0", considering things like where the repayments are coming from, comparing the nominal annualized return to Treasury bond rates, all the fraud that will never be accounted for, etc., etc. Even pro-bailout articles [4] have to include weasel phrases like "on a risk-adjusted basis, even [such and such proposed Y - X] isn’t that big a profit, given the huge downside the government had," speaking directly to my point of how it's hard to properly account for risk, which is what any other lender would have done. Arguably, since there weren't any competitors to the US government for providing bailout money, the interest rate we use to judge whether it was "profitable" should be sky high.

[1]: http://www.nationalreview.com/article/395822/overselling-tar...

[2]: http://www.huffingtonpost.com/2012/04/25/tarp-profit-a-myth_...

[3]: http://www.forbes.com/sites/halahtouryalai/2012/04/25/dont-b...

[4]: https://www.washingtonpost.com/business/economy/bailout-high...

Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

#106

Post by Lawtonfogle »

forgetsusername wrote: post #64
tim333 wrote: post #12

Earlier quoted context omitted.

There should really be some way to punish the individuals responsible, even just a fine comparable to the bonuses they made, rather than just having their employer pay compensation while those responsible continue to get richer.

> There should really be some way to punish the individuals responsible Honest question: do reasonable really look at the The Great Recession and think that there are "individuals" wholly responsible for what happened?

>Honest question: do reasonable really look at the The Great Recession and think that there are "individuals" wholly responsible for what happened?

Yes, that is how we handle complex issues. We look at the people who did the biggest wrong and hold them responsible for most if not all of the blame, even though we understand that there were far more actors who could've greatly impacted the actual harm done. Consider child abuse. There are certain forms where, depending upon reactions from parents and therapy offered, the outcome could vary greatly from extremely harmful to minimal damage to the child. But regardless of the outcome of the harm, and regardless if the outcome was influenced by other parties, we place the guilt of all the harm, both realized and risked, on the one who committed the abuse. We do not need mastery of how the financial system broke to deal out punishment just like we don't need mastery of the pathways by which emotional abuse leads to suicide attempts to punish the abuser.

It isn't perfect, but it is better than just washing our hands after slapping a few wrists when we don't understand all the details.

Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

#107

Post by Zigurd »

rayiner wrote: post #74
suprgeek wrote: post #30

So the company that was one of lead bad actors in a global crisis that wiped out lots of little folks gets - No execs (or anybody else) go to Jail Continues to do business as usual Pays a small fraction of its profits in fines (but gets to keep the multi-billions of tax-payer money under various govt. programs) Admits to no wrong doing Basically a speeding-ticket that gets dismissed when you pony up the cash after be…

My dad was heavily invested in NASDAQ-listed stocks and lost half his 401k in the 2000 crash. Who on Sand Hill Road should be in prison right now?

Everyone on Wall Street who wrote insurance-like contacts without insurance-like capital to back thenmshould be prosecuted for selling insurance outside the appropriate regulatory framework.

Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

#108

Post by rdlecler1 »

Not to mention, low interest rates gave banks 7 years to bolster their balance sheets. They have as much money as ever. It's really hard to see how Goldman gets penalized for this under that regime: "We're going to help you make tens of billions to recover and then we're going to charge you $5B for damages. I hope you've learned your lesson."

Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

#109

Post by Laaw »

pak wrote: post #105
Laaw wrote: post #100

Earlier quoted context omitted.

No one said or implied any of what you're saying. Did we or did we not get more money back from the banks than we gave? That was the question, and the answer was we did. No one's making value judgements about that, it's just a statement of undeniably true fact. That is the literal definition of profit, and the US government made a profit on the loan.

Look, man, there's a reason this thread is all the way at the bottom of the page. If you actually think that your "literal definition of profit" (that any returned Y in the future, minus X loaned now, exceeds 0) is at all meaningful in a world with inflation, risk of default, and the commonly accepted practice of charging interest, I don't know what else to say. Please see any [1] of [2] these [3] to understand why i…

What are you trying to prove, that it wasn't profitable? That the government's bank account was not a higher value higher after the bailout than it was before the bailout?

Because that's a fact, and not an opinion. You seem to be equating a lot of "is" with "should", and I'm not dealing at all in the "should". It is a fact of this universe that the US government made a profit off of the bailout, not mater how many links you provide (that don't provide a contrary point of view).

Re: Goldman Sachs Will Pay $5B to Settle Financial-Crisis Claims

#110

Post by pak »

Laaw wrote: post #109
pak wrote: post #105

Earlier quoted context omitted.

Look, man, there's a reason this thread is all the way at the bottom of the page. If you actually think that your "literal definition of profit" (that any returned Y in the future, minus X loaned now, exceeds 0) is at all meaningful in a world with inflation, risk of default, and the commonly accepted practice of charging interest, I don't know what else to say. Please see any [1] of [2] these [3] to understand why i…

What are you trying to prove, that it wasn't profitable? That the government's bank account was not a higher value higher after the bailout than it was before the bailout? Because that's a fact, and not an opinion. You seem to be equating a lot of "is" with "should", and I'm not dealing at all in the "should". It is a fact of this universe that the US government made a profit off of the bailout, not mater how many li…

> What are you trying to prove, that it wasn't profitable?

I'm trying to tell you that your chosen definition of "profitable" is utterly meaningless in a discussion of economics, but you have completely closed your mind to this idea. You don't seem to understand inflation, interest rates, opportunity cost, or the difference between accounting profit and economic profit [1]. Therefore, I can't proceed with this conversation.

[1]: https://www.khanacademy.org/economics-finance-domain/microec...

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